Prime Minister Tony Abbott has conceded a new deficit levy on high-income earners is a tax in heated exchanges with talkback radio callers in Melbourne who accused him of lying, fearmongering and endangering the health of pensioners.

Prime Minister Tony Abbott in a Fairfax Radio interview, after being grilled by talkback callers on ABC radio. Photo: Penny Stephens

Mr Abbott, who has been on a media blitz to sell the government's unpopular budget, was castigated by callers to ABC Melbourne 774 on Wednesday morning, including a pensioner who said she worked on a sex line to pay for her health costs.

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The first caller, Stella from Geelong, who said she had been a lifetime Liberal voter, told Mr Abbott: "I accept if you need to do a harsh budget. What I cannot accept is myself and other intelligent voters being condescended to by politicians who won't answer a straight question ... It makes us feel that you're treating us like idiots."

Stella said the deficit levy – introduced despite pre-election promises not to introduce new taxes – showed Mr Abbott has not been upfront with voters.

"I obviously accept a levy is something you pay out of your pocket," Mr Abbott said. "I'm not going to quibble over calling it a tax – if you want to call it a tax that's fine."

Mr Abbott was less inclined to call the reintroduction of fuel excise indexation a new tax.

"I absolutely concede some taxes are going up and I've never suggested otherwise," he said.

Gloria from Warburton said a new $7 fee on GP visits and the increased cost of medication would leave her $850 a year worse off.

"I would like to ask you if you'd like your mother or your grandmother to be in my situation," she said.

"I'm a 67-year-old pensioner with three chronic incurable medical conditions – two life-threatening. I just survive on around $400 a fortnight once I pay my rent and I work on an adult sex line to make ends meet. That's the only way I can do it.

"What do you suggest I cut out Mr Abbott? Food, electricity, firewood, Christmas and birthday presents to my grandchildren? Or should I just die and get out of your way?"

Mr Abbott said she and other pensioners would be better off because the government would scrap the carbon price but retain the compensation payments.

Later, television footage began to circulate on social media showing the Prime Minister winking at radio host John Faine when Gloria mentioned her occupation.

The wink: Abbott's moment in a gif

A spokeswoman from the Prime Minister's Office said Mr Abbott's wink was to assure Faine that he was happy to proceed with the call, not a judgment of the caller. The ABC had not been aware that Gloria was a sex line worker before putting her call to air.

"I'm supposed to be a part of your natural constituency [but] I'm absolutely ropeable that as someone who should be able to rely on a Liberal government to support my income, my lifestyle, I'm not able to do that," she said.

"Why is your political agenda coming before our economy – and why are you lying to everybody and scaring people? Top economists around the world are contradicting what you're saying about our economy."

One student caller to the station declared "we've got your back" over changes to the higher education sector and criticised students involved in protests.

"I don't know whether he's a young Lib but if he's not he should be," Mr Abbott said.

Mr Abbott was also confronted by a caller named Chantelle, who said she faced the end of her contract as a home and community care worker.

"We don't know what is going to happen after that three years," she said.

Mr Abbott responded that he also had a three-year contract and "I don't know what is going to happen after three years".

"We all have to live with uncertainty and it's not nice and sometimes you've got a sick feeing in the pit of your stomach when you contemplate the future," he said.

With the anger over the federal budget showing no signs of subsiding, the Prime Minister was asked whether he had divided the nation.

"I think I have alerted the country to the fact that we could not go on as we were, but now there is a plan," he said.

"It's the only plan on the table. Labor has no plan except to put its head in the sand and say there is no problem."

Faced with opinion polls giving Labor an election-winning lead and anger over his first budget, Mr Abbott said the Coalition was in "political jeopardy" and first-term governments were "not invulnerable".

"We would not have been putting ourselves in political jeopardy if we didn't think it was absolutely necessary to change the country for the better," he said.

Last week, Mr Abbott was confronted on breakfast television by Vilma Ward, 85, who was furious about changes to the age pension and responded to his explanations on broken promises with: "I have never heard such rubbish in all my life."

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